Presentation on theme: "Contract Award, Performance, and Administration. Award of Contract Contract Documents Documents should clearly define: FTHE SCOPE OF WORK TO BE PERFORMED."— Presentation transcript:

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Award of Contract Contract Documents Documents should clearly define: FTHE SCOPE OF WORK TO BE PERFORMED FTHE GOODS TO BE SUPPLIED FTHE RIGHTS AND OBLIGATIONS OF THE PURCHASER AND OF THE CONTRACTOR OF SUPPLIER AND

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Award of Contract Contract Documents (contd) FIN ADDITION TO THE GENERAL CONDITIONS OF CONTRACT ANY SPECIAL CONDITIONS APPROPRIATE TO THE NATURE AND LOCATION OF THE PROJECT SHOULD BE INCLUDED

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CONTRACTS FOR THE INTERNATIONAL SALE OF GOODS SHOULD BE PREPARED ON THE BASIS OF EQUALITY AND MUTUAL BENEFIT

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Contract Definition A CONTRACT IS AN AGREEMENT BETWEEN TWO OR MORE PARTIES WHEREBY EACH PARTY PROMISES TO DO, OR NOT DO DO, SOMETHING: A TRANSACTION INVOLVING TWO OR MORE INDIVIDUALS, WHEREBY EACH HAS RECIPROCAL RIGHTS TO DEMAND PERFORMANCE OF WHAT IS PROMISED (Friedman, Jack. P., Dictionary of Business terms, page 123)

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CONTRACT AGREE TO TERMS, HAVE THE RIGHT TO DEMAND PERFORMANCE MORE IMPORTANT THIS PROMISE TO DO OR NOT TO DO SOMETHING IS ENFORCEABLE BY LAW AND INCORPORATES REMEDIAL RIGHTS FOR NON PERFORMANCE SELLER BUYER

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Applicable Law A CONTRACT COMES INTO BEING WHEN THE PARTIES HAVE REACHED AGREEMENT ON ALL ESSENTIAL POINTS IN THE FORM REQUIRED BY THE APPLICABLE LAW

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Applicable Law (contd) WORLD BANK STANDARD DOCUMENTS FA CONTRACT WILL BE INTERPRETED IN ACCORDANCE WITH THE LAWS OF THE PURCHASERS COUNTRY FUNTIL A FORMAL CONTRACT IS SIGNED, THE BIDDERS OFFER TOGETHER WITH THE NOTIFICATION OF AWARD WILL CONSTITUTE A BINDING CONTRACT

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Contract Format (contd) FGENERAL CONDITIONS OF CONTRACT FSPECIAL CONDITIONS OF CONTRACT FAMENDMENTS TO THE BIDDING DOCUMENTS, IF ANY FPURCHASER NOTIFICATION OF AWARD

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Preparation of Contract FEACH CONTRACT IS UNIQUE FBUYER AND SELLER MUST AGREE FPREPARE ON THE BASIS OF EQUALITY AND MUTUAL BENEFIT FPREPARE IN LINE WITH THE APPLICABLE LAW

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Preparation of Contract (contd) FAVOID CONFUSION AND LEGAL GAPS (by adhering to standard documents, such as those included in the World Banks Sample Bidding Documents) FMAKE SURE YOU KNOW YOUR CONTRACT

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CARRIAGE AND INSURANCE PAID TO (CIP) DELIVERY: – TO FIRST CARRIER NOMINATED BY SELLER SELLER CONTRACTS AND PAYS: – CARRIAGE – INSURANCE CIP USED IRRESPECTIVE OF MODE OF TRANSPORT, INCLUDING MULTIMODAL TRANSPORT 26 TO NAMED PLACE OF DESTINATION

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28 Most suitable for purchase of imported goods and equipment Use of Letters of Credit

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29 Definition of Letters of Credit A written undertaking by a bank (issuing bank) given to the Seller at the request and in accordance with the instructions of the Purchaser to effect payment up to a stated amount, within a prescribed time limit, and against stipulated documents

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Lump Sum Contracts For simple contracts, construction of buildings Quantities estimated by Contractor/Bidder under his own responsibility Final Payment predetermined as a LS Payments as per Schedule of Activities Normally no price increase (except under Price Adjustment provision in contract) Engineer to supervise quality and compliance with contract specifications 33

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SECURITIES, BONDS AND GUARANTEES (contd) RETENTION –NORMALLY 5% OR 10% OF EACH PAYMENT CERTIFICATE –HALF PAID TO CONTRACTOR ON TAKE OVER –SECOND HALF REPLACEABLE BY BANK GUARANTEE ON TAKE-OVER (HENCE ALSO PAID ON TAKE-OVER) ADVANCE PAYMENTS –TO BE SECURED BY BANK GUARANTEE (NOT BY AN INSURANCE BOND!) FOR EQUAL AMOUNT

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Issues to be addressed Monitor contract execution to ensure that Contractor/Supplier performs as per Contract Sanctions in case of non-performance Payment should be contingent on satisfactory performance 41

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Recommendations for Effective Monitoring (1/2) Monitoring system should provide for adequate sanctions against both public officers and contractors/suppliers Sanctions must be well known to both contractors and implementing agencies Project monitoring should be provided with appropriate staff, equipment, and motivation and by empowering the team with the required authority 42

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Recommendations for Effective Monitoring (2/2) Need for a handbook for monitoring goods/works/services, build on best practice, and addressing both financial and technical issues Use independent consultants for monitoring/supervision of large technical supplies and civil works 43